Westpac: Fixed-rate loans ending means higher interest rates will cause ‘inevitable’ pain for mortgage holders
The days of Australian borrowers being able to largely absorb the impacts of repeated interest rate rises will soon be over, Australia’s second-biggest bank has predicted.\n\nWestpac chief executive Peter King says it’s “inevitable” the impact of higher rates would be felt, including when borrowers’ low fixed-rates roll over onto higher variable rates.\n\nWATCH THE VIDEO ABOVE: Why Aussie grocery prices are soaring.\n\nStream the world\\'s best reality, entertainment and true-crime shows free on 7plus\n\n“We are not yet seeing increases in hardship or stressed assets,” King said on Monday, after announcing the company had posted a $5.7 billion annual profit.\n\n“Many customers built up savings during the past two years, and 68 per cent remain ahead on their mortgage repayments.\n\n“However, it is inevitable that the impact of higher rates will be felt, including when borrowers’ low fixed-rate loans are rolled over.\n\nWestpac says many of its customers remain ahead on their mortgage repayments. File image. Credit: AAP\n\n“That will be hard for people, and it’s important to acknowledge the challenges ahead as customers navigate the tougher environment.”\n\nAs of September, just 1.07 per cent of Westpac’s assets were considered “stressed”, down from 1.1 per cent in
March and 1.91 per cent in September 2020.\n\nJust 0.51 per cent of borrowers were more than 90 days behind on their payments, down from 0.56 per cent in March and 0.8 per cent in September 2020.\n\nCooling economy\n\nKing said the Australian economy remained robust, but the heat would come out of it as rates rise.\n\n“Housing prices have fallen in recent months and this will continue into 202
3. Credit growth is expected to ease. GDP growth will slow and unemployment will rise,” he said.\n\n“These will be necessary outcomes if we are to lower inflation.”\n\nThe bank on Monday posted a better-than-expected earnings result, with $5.7 billion in net profit for the 12 months to September 30, up 4 per cent from the year before.\n\nRevenue was down 2 per cent to $19.9 billion and cash earnings fell one per cent to $5.3 billion, beating consensus estimates by 3.7 per cent, according to E&P Financials banking analyst Azib Khan.\n\nAt 1.23pm AEDT Westpac shares were down 4.2 per cent to $23.12, the worst performance of any of the big four banks, even ex-dividend ANZ.\n\nWestpac CEO Peter King has outlined his expectations for the Australian economy. File image. Credit: AAP\n\nKing said Westpac’s mortgage business grew slower than its peers over the year, but gained momentum in the second half.\n\nHe was pleased with the roll-out of the Westpac app, which offers improved self-serve capabilities and a less than two second log-on speed.\n\nWestpac said it was continuing its migration to digital, with the number of Australian branches down 14 per cent over the past two years, to 732, while the number of Westpac ATMs is down 16 per cent to 1,071 over the same period.\n\nMeanwhile, Westpac’s number of digitally active customers is up 5 per cent to 5.48 million, and its digital transactions are up 13 per cent to 356 million.\n\nWestpac will pay a final dividend of 64 cents per share, taking the full year payout to $1.25.\n\n- With Warren Barnsley
